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CE Resource, Inc. v. Magellan Group

July 7, 2009


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge


Plaintiff CE Resource, Inc. ("Plaintiff") initiated this action on December 9, 2008. Presently before the Court is a Motion to Dismiss and/or for Summary Judgment filed by Defendant The Magellan Group, LLC ("Magellan"). For the following reasons, Magellan's Motion is denied.*fn1


Plaintiff was established for the purpose of providing continuing medical education to nurses and is accredited by the American Nurses Credentialing Center's Commission on Accreditation, the Accreditation Council for Continuing Medical Education, and various individual states.

In September 2007, Plaintiff and Defendant Joseph Knight ("Knight"), a freelance writer, entered into a Freelance Writer Agreement. Pursuant to that Agreement, Knight represented that a course on "The Herpes Viruses," which he provided to Plaintiff, was the result of his original work. Knight also denied having previously submitted the product to any other party or to having published the course, and agreed to refrain from doing so in the future. Plaintiff subsequently registered the product with the United States Copyright Office.

Plaintiff later conducted an internet search and came to the conclusion that Knight had submitted another course series, "Herpes Simplex Virus: An Introduction" and "Chicken Pox: The Varicella Zoster Virus," which allegedly copied substantial portions of the product belonging to Plaintiff, to Magellan for publication.

According to Plaintiff, Magellan purchased the infringing courses from Knight, and Knight delivered one or more copies of those infringing courses to Magellan. Additionally, Plaintiff claims that Magellan copied, distributed, and sold copies of the infringing products and willfully ignored Knight's wrongful acts. Plaintiff also contends, inter alia, that Magellan intentionally uploaded as much content as possible to its website without regard to industry standards or practices, and that, contrary to its own advertising, Magellan failed to conduct due diligence regarding its continuing education courses.

Consequently, Plaintiff filed this action alleging causes of action for Copyright Infringement (against all Defendants), Breach of Contract (against Knight only), and Violations of California Business and Professions Code §§ 17200, et seq., and 17500, et seq. (against Magellan only).


As a threshold matter, the Court notes that Defendant Magellan, with no explanation to the Court, untimely filed its instant Motion. The Court finds this late filing consistent with Magellan's pattern of dilatory behavior throughout the relatively short span of this litigation.

First, Magellan failed to timely file any response to Plaintiff's FAC, a failure that resulted in an entry of default by the Clerk of the Court. That entry of default was later vacated pursuant to stipulation of the parties.

However, by way of that stipulation, the parties agreed that Defendant Magellan was to respond to the FAC not later than April 6, 2009. Nevertheless, Defendant did not file its Points and Authorities in support of its instant Motion until 8:33 p.m. on April 7. Additionally, Magellan wholly failed to file any Reply to Plaintiff's Opposition to the Motion to Dismiss.

Accordingly, Magellan is hereby admonished that the dates set in this Court are mandatory and adherence to applicable rules is not optional. This Court will not condone the blatant disregard of both the local and federal rules that Magellan's conduct demonstrates. Failure to adhere to any future deadlines may result in the imposition of sanctions which may include monetary sanctions, orders precluding proof, elimination of claims or defenses, or such other sanctions as the Court deems appropriate. Nevertheless, in the interest of judicial economy, the Court will proceed to address the merits of Magellan's Motion, which is now denied.

A. Personal Jurisdiction

Defendant first challenges this Court's jurisdiction arguing that "the only statements made by Plaintiff regarding personal jurisdiction over Magellan are conclusory, and Plaintiff provides not a single fact that would support jurisdiction." Motion, 4:3-6. However, according to Plaintiff, "[t]his Court has personal jurisdiction over Magellan because Magellan conducts business in California, and maintains a website accessible in California." FAC, ¶ 5.

"When, as here, subject matter jurisdiction is premised on a federal question, the exercise of personal jurisdiction over a non-resident defendant must be authorized by a rule or statute and consonant with the constitutional principles of due process. Because there is no applicable federal statute governing personal jurisdiction, [the Court's] starting point is California's long-arm statute." Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002). "California Code of Civil Procedure § 410.10, California's long-arm jurisdiction statute, allows for the exercise of jurisdiction 'on any basis not inconsistent with the Constitution of this state or of the United States.'" Rocke v. Canadian Auto. Sport Club, 660 F.2d 395, 398 (9th Cir. 1981). "Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analysis under state law and federal due process are the same." Yahoo! Inc. v. LaLigue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006).

"Constitutional due process is satisfied when a non-resident defendant has 'certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Glencore Grain, 284 F.3d at 1123, quoting International Shoe Co. V. Washington, 326 U.S. 310, 316 (1945). "Depending on the nature of a foreign defendant's contacts with the forum, a federal court may obtain either specific or general jurisdiction over him.

A court exercises specific jurisdiction where the cause of action arises out of or has a substantial connection with the defendant's contacts with the forum. Alternatively, a defendant whose contacts are substantial, continuous, and systematic is subject to a court's general jurisdiction even if the suit concerns matters not arising out of his contacts with the forum. Whether dealing with specific or general jurisdiction, the touchstone remains 'purposeful availment.' By requiring that 'contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State,' the Constitution ensures that 'a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts.'" Id. (internal citations omitted) (emphasis in original).

According to Magellan, it "lacks the minimum contacts with the State of California necessary to confer jurisdiction on this Court." Id., 7-8. Magellan relies on the following facts in support of its instant Motion:

1) Magellan is a Maryland LLC with its principal place of business in Maryland.

2) Magellan has historically paid corporate taxes only in Maryland.

3) Customers purchasing courses from Magellan are required to agree that Maryland law is applicable to disputes arising from those purchases.

4) The agreement entered into between Knight and Magellan stated that it was to "be construed pursuant to the laws of the State of Maryland applicable to contracts made and performed entirely therein."

5) Magellan's website states, "If you believe your work has been copied in a manner that constitutes copyright infringement, you may notify our copyright agent," who is located in Maryland.

6) Knight allegedly delivered the infringing Product to Magellan in Maryland.

Motion, 4:10-5:5.

Nevertheless, in Opposition to Defendant's instant Motion, Plaintiff points to a number of facts ignored by Magellan:

1) Magellan is specifically licensed to offer continuing education in California.

2) Defendant Knight resides in California and Magellan reached in to California to ...

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